Nokia Siemens JV Finalized; Starting Operations April 1

Nokia shares are expected to rise today on the news that the cellphone giant has finalized its network equipment joint venture with Siemens. The 50-50 venture, called Nokia Siemens Networks, will begin operations on April 1. Siemens will be investing an additional €800 million ($1.06 billion) in the venture, bringing its contribution to €2.4 billion in net assets; Nokia will add €100 million, bringing its portion to €1.7 billion. The venture is forecast to show approximately €17 billion, or about $22.43 billion, in annual revenue, making it the world's second-largest supplier of equipment to telecom carriers on that measure, behind Ericsson of Sweden but just ahead of France's Alcatel-Lucent. The venture was delayed by three months because of an investigation into a bribery scandal at Siemens's telecoms equipment unit. Nokia will hold four of the seven seats on the company's board. Nokia CEO Olli-Pekka Kallasvuo will be chairman and Siemens CEO Klaus Kleinfeld vice-chair. Nokia Siemens Networks will be based in Espoo, Finland, Nokia's home base.
Sources: Press release, Reuters, MarketWatch, Wall Street Journal
Commentary: Nokia-Siemens Telecom JV Delayed, But Not Dead • Siemens Seems Secure, Despite Bribery Suspicions - Barron's • More Consolidation in Telecom Equipment As Nokia and Siemens Announce $31.6 Billion Deal
Stocks/ETFs to watch: Nokia Corp. (NOK), Siemens AG (SI). Competitors: Telefon AB LM Ericsson (ERIC), Alcatel-Lucent (ALU), Motorola Inc. (MOT). ETFs: Wireless HOLDRs (WMH), Morgan Stanley Technology ETF (MTK)
Conference call transcripts: Nokia Q4 2006

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